In Consolidation Mode, Bitcoin Awaits Decisive Move

Bitcoin has been restricted to a narrow price range of $10,000 to $11,000 for almost 72 hours.

CoinDesk’s Bitcoin Price Index (BPI) moved above the $10,000 mark on Monday, but the rally from last Sunday’s low of $9,304.68 ceased at a seven-day high of $11,044.16 yesterday. At the time of writing, the BPI is at $11,583.

The cryptocurrency has depreciated by 1.4 percent in the last 24 hours, according to data from CoinMarketCap. Further, it ended last month on a flat note, and is reporting a 1 percent gain on a weekly basis.

That said, trading activity could pick up if the pace of bitcoin (BTC) sees an inverse head-and-shoulders breakout. However, technical charts also indicate scope for a big sell-off if BTC dips below the lows seen over the weekend.

Bullish scenario: inverse head-and-shoulders breakout

The descending trendline resistance and the inverse head-and-shoulders neckline are shown to converge at $11,640 by Saturday.

A high volume break (UTC lose) above $11,640 would signal long-term bull market revival and could open up towards $17,000-$17,400.

Bearish scenario I: BTC drops below $9,280

BTC could drop to point D ($6,659), as indicated by the bat pattern (harmonic pattern), if yesterday’s inverted bearish hammer candle on the downward sloping 50-day moving average is followed by a break below $9,324.75 (Feb. 25 low), today or in the next few days.

As per rules, the leg BC could go as high as $11,502 – 88.6 percent Fibonacci retracement of leg AB. Only a move above $11,502 would invalidate the bat pattern.

Note that point D is a “bullish reversal” according to bat pattern rules, meaning BTC will likely witness a sharp rebound from $6,659.

Bearish scenario II

Another possibility is that BTC moves above $11,502, but faces rejection at the confluence of inverse head-and-shoulders neckline resistance and descending trendline resistance

Failure to take out the confluence of resistance at $11,640, followed by a quick drop below $9280.4, could yield a sell-off to $6,000 (February low).

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